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Why Arcos Dorados Is Soaring

McDonald's franchisee Arcos Dorados reports promising earnings.

Shares of Arcos Dorados(NYSE: ARCO), the largest franchisee of McDonald's(NYSE: MCD) restaurants in Latin America, are up sharply today after the company reported upbeat second-quarter earnings.

The fast-food operator continued its strong top-line momentum. Compared to the same quarter a year ago, total revenue grew an impressive 15.5% on a constant currency basis. Systemwide same-store sales, an important statistic in the restaurant industry, increased 10.4%.

Although these growth rates are the slowest in at least six quarters, they're nevertheless impressive for two reasons. First, as you can see in the table below, they matched up against massive figures from the second quarter of 2011, when top-line growth and comps came in at 18.5% and 14.8%, respectively.

For the quarter, Arcos reported earnings per share of $0.06, undercutting a consensus estimate of $0.07. According to the company's CEO: "Our operations continue to be very strong, led by higher average check growth, increased guest counts and successful marketing activities across all regions. The result is double-digit organic revenue growth, which is on target with our stated expectations."

While shares in the fast-food chain are up today, they're down nearly 27% for the year and approximately 30% since going public in April 2011.

The company pays a quarterly dividend of $0.06, equating to an annualized dividend yield of 1.6% -- though, if you're looking for dividend stocks, the nine identified in our recent free report about rock-solid dividend payers are significantly more accretive to wealth. Click here to gain instant access to this report.